Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 970,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $26. All of the company’s sales are on account.

Required:

Compute the following financial data for this year:

1. Earnings per share. (Round your answer to 2 decimal places.)

2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

4. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

5. Book value per share. (Round your answer to 2 decimal places.)

Weller Corporation
Comparative Balance Sheet
(dollars in thousands) This Year Last Year Assets Current assets: Cash $ 3,302 $ 4,230 Accounts receivable, net 16,100 9,100 Inventory 10,550 8,880 Prepaid expenses 1,970 2,440 Total current assets 31,922 24,650 Property and equipment: Land 7,700 7,700 Buildings and equipment, net 20,900 20,700 Total property and equipment 28,600 28,400 Total assets $ 60,522 $ 53,050 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 11,200 $ 9,150 Accrued liabilities 940 1,550 Notes payable, short term 470 470 Total current liabilities 12,610 11,170 Long-term liabilities: Bonds payable 7,500 7,500 Total liabilities 20,110 18,670 Stockholders' equity: Common stock 970 970 Additional paid-in capital 5,050 5,050 Total paid-in capital 6,020 6,020 Retained earnings 34,392 28,360 Total stockholders' equity 40,412 34,380 Total liabilities and stockholders' equity $ 60,522 $ 53,050

Explanation / Answer

Weller Corporation Computation of financial data 1 Earnings per share =Net Income/No. of common stock Outstanding =6420000/970000 6.62 2 Price Earnings Ratio =Market Price per share/Earnings per share =26/6.62 3.93 3 Dividend Payout Ratio =Dividends/Net Income% OR =Dividend per share/Earning per share% =388000/6420000% =0.40/6.62% 6.04 6.04 Note : Dividend per share =Dividends/No. of shares outstnading =388000/970000 0.40 4 Dividend yield Ratio =Dividend per share/Market Price per share% =0.40/26% 1.54 5 Book Value per share =Shareholder's Equity/No. of shares outstanding =40412000/970000 41.66 We appreciate the rating of our answers Thank You

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